Nearly five years after creating a new brand from its tiny Taiwan base, loss-making BenQ Corp. is reinventing itself in hopes of becoming a global name, but faces an uphill climb in its quest.

Analysts say that despite a series of recent changes aimed at boosting efficiency, any significant transformation is nowhere in sight for the sprawling company unless it further improves product design and shortens delivery times.

BenQ is hoping to imitate its former parent, PC maker Acer Inc., by separating out its mobile business as a stand-alone entity and putting other contract businesses, including monitors and laptops, into another company with a new name.

At the same time, reports in the German media this week said the company was looking to potentially sell off its cellphone manufacturing facilities in Europe as it looks to contract out that part of the business and focuses on brand building.

To cut costs, BenQ said recently it would also move its Taiwan-based handset production to China, a move affecting less than 100 employees and 10 percent of output, as part of the broader trend of Taiwan firms moving manufacturing to China.

The overhaul is similar to what Acer did in late 2000, when the world's number-four PC vendor split itself into two firms, spinning off its manufacturing business to ease customer concerns over conflict of interest and boost margins in a fiercely competitive computer market.

Other major cellphone makers, including global leaders Motorola and Nokia, already use a hybrid strategy of in-house and contract manufacturers, putting most of their energy into product design, sales and brand building.

"When you decide to do brand and make it play, you must have strong capability of execution, which BenQ doesn't have now," said Vincent Chen, a CLSA analyst based in Taipei.

BUMPY ROAD

BenQ's handset shipments in the second quarter were worse than the firm had expected after it delayed the launch of new models, caused by weak development ability.

The firm took over Siemens's loss-making handset unit late last year to form BenQ Mobile, which has said it expected to return to profit in the middle of 2007, instead of this year as it had previously hoped.

"Time to market is very important because you will be lagging other brands if you don't know what consumers want," Chen said. "You really have to make lots of efforts on product design."

BenQ announced in August it would make its cellphone business into a standalone unit. But the plan has met with lukewarm reaction, with its shares down 14 percent since then.

Its stock has slumped 45 percent this year on the company's gloomy earnings outlook, even as Taiwan's main TAIEX index gained 5 percent.

Hit by strong competition in the handset industry dominated by Nokia and Motorola, BenQ posted a third straight quarterly loss in the second quarter of 2006.

The road ahead may be long for BenQ, but rewards could also be big if the company can follow in the footsteps of Acer, which recently reported a 36 percent jump in second-quarter profits.

Despite the challenges, BenQ Chairman K.Y. Lee said he remains confident of his brand gamble.

"I believe BenQ can become a strong brand," Lee told an investor conference last month. "We are still at the investment stage but the value of our brand has emerged gradually. We are on a right track."